Last checked at 21 Apr 2009 07:00
21 April 2009
RECORD PLC
FOURTH QUARTER TRADING UPDATE
Record plc ("Record" or the "Company"), the specialist currency investment manager, announces today that as at 31st March 2009 the Group's assets under management equivalents ("AuME") totalled $31.5 billion (31st December 2008: $35.6 billion). In addition, as referred to in the Trading Update of 20th January 2009 and not included in the above figures, Record has signed a US active hedging mandate that it anticipates will grow to $4 billion over the next twelve months and anticipates commencing the programme in May. For the additional US active hedging mandate referred to in the 20th January 2009 statement, contract discussions are expected to conclude positively in the near future.
The Board anticipates that pre tax profits will be in line with market expectations for the financial year ended 31st March 2009.
AuME expressed in Sterling as at 31st March 2009 totalled £21.7 billion (31st December 2008: £24.7 billion).
1. AuME composition
Record saw a decline in AuME and client numbers during the period between 31st December 2008 and 31st March 2009. The composition of AuME at 31st March 2009 was as follows:
| AuME $ bn | ||||
| 31st March 2009 | 31st December 2008 | |||
| Absolute Return | ||||
| Segregated | 8.3 | 8.7 | ||
| Pooled | 5.1 | 6.5 | ||
| Absolute Return Sub Total | 13.4 | 15.2 | ||
| Active Hedging | 4.0 | 4.8 | ||
| Passive Hedging | 13.0 | 13.9 | ||
| Cash & Futures | 1.1 | 1.7 | ||
| Total | 31.5 | 35.6 | ||
2. AuME MOVEMENT
Net client AuME flows in the three months to 31st March 2009 by product were as follows:
| Net client AuME flows - $ bn | ||||
| 3 mths to 31st March 2009 | 3 mths to 31st December 2008 | |||
| Absolute Return | ||||
| Segregated | 0.2 | (1.7) | ||
| Pooled | (1.0) | (1.3) | ||
| Absolute Return Sub Total | (0.8) | (3.0) | ||
| Active Hedging | (0.1) | (0.1) | ||
| Passive Hedging | (0.2) | 1.0 | ||
| Cash & Futures | (0.5) | (0.5) | ||
| Total | (1.6) | (2.6) | ||
Record had 121 clients at 31st March 2009, compared to 137 at 31st December 2008.
The factors other than client flows which impacted AuME during the quarter, totalling -$2.5 billion, were:
| (i) Exchange rate movements: | -$0.9bn |
Exchange rate movements during the period affect the conversion of non-US dollar mandate sizes into US Dollar AuME;
| (ii) Movements in global stock and other markets: | -$1.1bn |
Substantially all the Passive and Active Hedging, and some of the Absolute Return mandates are linked to stock and other market levels. Consequently AuME is affected by movements in these markets which had a negative impact in the quarter;
| (iii) Pooled fund investment performance: | -$0.7bn |
Investment returns are compounded on a geared basis into the AuME of the pooled funds and so impact AuME;
| (iv) Gearing of pooled funds: | +$0.2bn |
Due to changes in market conditions it had been previously necessary to de-gear the currency positions within certain equity based funds. This was reversed during the quarter resulting in a rise in AuME.
Investment performance in Record's Absolute Return product was negative during the quarter ending 31st March 2009 and for an un-geared portfolio equated to -44 bps over the quarter as a whole (quarter to 31st December 2008: decline of 150 bps). Record's Directors are confident that the long-term investment strategy remains robust and are encouraged by the recent positive performance towards the end of the quarter.
3. AVERAGE FEE RATES
During the quarter to 31st March 2009, average management fee rates were maintained across all product categories.
Absolute Return pooled accounts have the option to pay management fees only or a lower management fee plus performance fees. Those clients that have chosen to pay only management fees have been offered, from April 2009, the option to move to management plus performance fees comprising a management fee approximately 45% lower than the existing arrangement together with a high water mark at inception. It is anticipated that all pooled clients who currently pay management fees only will take up this offer.
Chairman and CEO, Neil Record, commenting on trading, said 'Interest in active hedging both in the US and UK continues to increase. We have now signed the active hedging contract for the first of the two large state pension funds that we were selected for during the third quarter. We have continued to support the Absolute Return clients and have offered favourable terms to pooled clients to remain with Record. Performance in March and the first few weeks of April has been positive and we remain confident in and committed to our long-term investment strategy.'
Record will announce its financial results for the year ended 31st March 2009 on 16th June 2009.
For further information, please contact:
| Record plc | Tel: +44 (0) 1753 852 222 |
Neil Record Paul Sheriff
| Hogarth | Tel: +44 (0)20 7357 9477 |
Nick Denton
Julian Walker
Notes to Editors
Record plc
Record is a specialist currency investment manager and provider of currency hedging services for institutional clients. Founded in 1983, Record has established a market leading position as a currency asset manager. Specifically, the Group has a leading position in managing currency for Absolute Return for institutional clients.
The Group has three principal product lines:
currency for Absolute Return, in which Record enters into currency contracts for clients with the objective of generating positive returns;
active hedging, where Record seeks to eliminate the impact of currency movements on elements of clients' investment portfolios that are denominated in foreign currencies when these movements are expected to result in an economic loss to the client, but not to do so when they are expected to result in an economic gain; and
passive hedging, where Record seeks to eliminate fully the economic impact of currency movements on elements of clients' investment portfolios that are denominated in foreign currencies.
Record (LSE: REC) was admitted to trading on the London Stock Exchange on 3rd December 2007.
This announcement includes information with respect to Record's financial condition, its results of operations and business, strategy, plans and objectives. All statements in this document, other than statements of historical fact, including words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "may", "will", "continue", "project" and similar expressions, are forward-looking statements.
These forward-looking statements are not guarantees of the Company's future performance and are subject to risks, uncertainties and assumptions that could cause the actual future results, performance or achievements of the Company to differ materially from those expressed in or implied by such forward-looking statements.
The forward-looking statements contained in this document are based on numerous assumptions regarding Record's present and future business and strategy and speak only as at the date of this announcement.
The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this announcement whether as a result of new information, future events or otherwise.